Publicly traded securities are the most common form of noncash charitable gifts. You may find that securities are the most attractive assets to give, because they are often highly appreciated, easily transferred, and in most cases, easily valued for deduction purposes without the need for a formal appraisal. The most common forms of securities gifts are shares of stock, bonds, and shares of mutual funds.
The typical donor:
- Holds securities that are highly appreciated in value
- Holds publicly traded securities
- Wants to transfer securities prior to sale
Gifts features and benefits:
- Immediate income tax deduction
- Deduction based on fair market value
- Avoidance of capital gains taxes
- Gift can be timed to match changes in the market
How Do I Make a Gift of Securities?
How you proceed depends on how your individual securities are held. If you hold the securities in your possession, they may be sent directly to LDS Foundation. If the stock, bond, or mutual fund share is held in a brokerage account, you will need to work with your broker to complete the transaction. It is important that you send the certificate under separate cover from the stock power. The stock power must have a medallion signature guarantee, which you can obtain from your local bank. Gifts of securities held in a brokerage account can be made directly through the Church’s Donations-in-Kind office. This office will work directly with your broker to correctly complete your gift.
How Do I Make a Gift of Securities Using Gift Planning Tools?
Securities can also be used to fund life-income gifts such as a charitable remainder unitrust, charitable remainder annuity trust, or a charitable gift annuity. In larger estates, securities are an ideal asset to fund a charitable lead trust. A gift bequest made through a revocable trust or will provides another alternative in making a gift of securities to the Marriott School.
More Information on Donations of Stocks or Bonds
Gifts of stock to the Marriott School of Management at BYU are processed through the Church’s Finance and Records Department. The method for making stock “gift” transfers to the Marriott School or the Church that has proven to be the most expedient has been the following:
- The donor delivers a letter of instruction to his broker indicating the stock and number of shares that he desires to contribute
- The donor indicates the use, or multiple uses of the gift (i.e., tithing, Marriott School Center for Entrepreneurship, Microenterprise Conference, etc.). Should you have any questions relative to the gift designation, please contact LDS Philanthropies at BYU
- Donors’ stock broker is instructed to contact Brent Palmer at the Church Finance and Records Department (800) 453-3860 extension 23828 and request the Church account number (i.e., if your account is with Merrill Lynch, Brent will gave your broker the Church’s Merrill Lynch account number.) (Note: The Church has accounts with nearly all brokerage companies.)
- Your broker should be instructed to forward on the FAX letter of instruction to Brent Palmer. This will enable Brent to direct your contribution to the appropriate entities
- As a further assurance that your broker will act upon your request promptly, notify him that you are sending a copy of the brokers instructions to Brent. Brent’s FAX number is (800) 453-3860 extension 21217
- The next step is for the donors’ broker to electronically transfer stock(s) to the Church’s brokerage account
- The preceding steps can all be accomplished in a matter of a few hours, thus expediting your transfer and contribution
- To enable the Marriott School to follow up on the transfer of your contribution from the Church to BYU/Marriott School, please send a copy of your letter of instruction by FAX to LDS Philanthropies at BYU
- If there are any questions or concerns please contact LDS Philanthropies at BYU
Other Facts You Should Know about a Gift of Securities
Gifts of securities provide a less expensive way for you to give than cash. For example, if you paid $1,000 for your stock five years ago and today’s fair market value is $3,000, you will receive an income tax deduction for the full fair market value, even though your cost basis in the security (what you paid for the stock) is only $1,000. The net tax benefit reduces the cost of your gift. To avoid capital gains tax, it is important to make your gift prior to selling the securities.
Your gift of stocks, bonds, or mutual fund shares is effective for income tax purposes, and hence deductible, when your certificate, accompanied by a properly prepared stock power in the name of the receiving charity, is unconditionally delivered to LDS Foundation or one of its staff members. If the certificate is mailed to LDS Foundation and postmarked prior to the end of the current year, your deduction may be taken on the date the certificate is mailed, even though LDS Foundation doesn’t receive the certificate until the next year. For safety purposes, the executed stock power should not be mailed in the same envelope with the stock certificate.
If you deliver your stock certificate to a broker who acts as your agent, your deduction is not effective until your agent delivers the certificate to LDS Foundation or one of its staff members. If your certificate is delivered to the issuing corporation with instruction to transfer the security into the name of the Marriott School, the gift is not deductible until the security is actually transferred on the books of the corporation. Since this date is unpredictable, this method of making gifts of stocks and bonds is usually not desirable.
If the securities you are giving are held in a brokerage account or bank trust account (as is frequently the case when the securities are held by a revocable trust), instructions to your broker or trustee to transfer the securities to the Marriott School will not complete your gift for tax purposes until your broker or trustee actually delivers the securities to the Church’s Donations-in-Kind office.
Tools Used with This Asset (Securities)
- Charitable Gift Annuity (CGA)
- Charitable Lead Trust (CLT)
- Charitable Pooled Income Fund (PIF)
- Charitable Remainder Annuity Trust (CRAT)
- Charitable Remainder Unitrust (CRUT)
- Deferred Charitable Gift Annuity (DCGA)
- Donor Advised Fund (DAF)
- Private Foundation
- Revocable Living Trust
- Support Organization
- Testamentary Trust